Qantas IR action terminated

A Qantas Airbus A380 sit on the tarmac at Heathrow Airport, London on Saturday after Qantas Airways grounded its global fleet indefinitely after weeks of disruptive strikes. Flights in the air continued to their destinations, but others were stopped even taxiing on the runway, according to one flier. Photo: AP

Mark Skulley, Melanie Beeby, David Crowe, Ben Woodhead and John Kerin

Unions involved in the industrial dispute want to “bake Qantas slowly”, chief executive Alan Joyce said as the he grounded the entire Qantas fleet on Saturday evening.
Photo: Sergio Dionisio

Stranded travellers gather at the Qantas check-in area at Hong Kong’s international airport on Saturday.
Photo: AFP

Qantas has grounded its entire fleet until further notice.
Photo: Getty

Transport Minister Anthony Albanese: ‘I think it is certainly a breach of faith with the government, the fact that there was no advanced notice of this action being taken by Qantas.’
Photo: Andrew Meares

The nation’s peak industrial umpire, Fair Work Australia, has ordered the termination of industrial action at Qantas Airways in a win for the government, airline and thousands of travellers stranded in Australia and overseas.

After a marathon 10-hour hearing that adjourned at midnight on Sunday, the full bench of FWA handed down its decision just after 2am AEDT on Monday.

“We should do what we can to avoid significant damage to the tourism industry,” FWA president Geoffrey Giudice said.

Qantas on Sunday evening said its entire domestic and international fleet would remain grounded until at least midday on Monday, but chief executive Alan Joyce has said the airline could have planes back in the air within six hours of a favourable FWA decision.

Prime Minister Julia Gillard had made it clear she wanted the industrial action at Qantas terminated by FWA, with lawyers for the government saying the dispute was causing tens of millions of dollars damage to the economy “hour by hour”.

Mr Joyce had said only a guarantee of complete cessation of industrial action would allow Qantas to return to the air, after conducting a risk assessment and getting clearance from the aviation safety regulator.

“We’re planning on [the fact] that termination will occur,” Mr Joyce said in an interview on Sunday.

“I don’t think from my perspective that a suspension will go through because that doesn’t solve the national interest issue because we have an airline that’s still grounded.”

A termination by FWA stops all industrial action and gives three weeks for further negotiations, with a possible three-week extension. FWA will arbitrate an outcome after that if no agreement has been reached.

Aviation unions had argued for a formal “suspension” of industrial action lasting up to 120 days to allow further negotiations.

Fair Work Australia was deciding whether industrial action at the airline should be terminated or suspended after Qantas announced the grounding of its fleet from 5pm on Saturday afternoon and flagged a staff lockout from 8pm on Monday in a dramatic escalation of its long-running dispute with three key unions.

“They [the unions] are trashing our strategy and our brand,” Qantas chief executive Alan Joyce said at a press conference on Saturday evening. “They are deliberately destabilising the company and there is no end in sight.”

The grounding, which will cost Qantas $20 million a day, has affected 68,000 passengers, including 17 world leaders in Perth for the Commonwealth Heads of Government meeting and travellers heading to Melbourne for the Spring Racing Carnival, and has benefited rivals such as Virgin Australia.

The shock move, announced just a day after the company’s annual meeting of shareholders in Sydney, reverberated around the world, with hundreds of passengers stranded from Los Angeles to London, Frankfurt and Singapore.

Justice Giudice and two fellow judges heard submissions from government, Qantas and union officials in Melbourne and via videolink in Sydney and Canberra on Saturday night and again from 2.15pm on Sunday following an urgent application by the federal government under section 424 of the Fair Work Act. The Victorian and NSW governments supported the termination action, citing the dispute’s severe economic consequences for their states. Queensland joined the action on Sunday.

Qantas’s executive group of operations, Lyell Strambi, told the FWA hearing in Melbourne he learned of the airline’s plan to lock out staff from Monday night from Mr Joyce on Saturday morning. However, a lockout had been one of the options canvassed in a risk assessment produced by the airline around October 20.

He said the Civil Aviation Safety Authority had written to Qantas on October 14, warning that it was paying close attention to the safety impact of the industrial action.

Mr Strambi said Qantas had always had three options in its talks with unions – to negotiate agreements in good faith, capitulate to union demands or take industrial action of its own in the form of a lockout.

The CASA letter of October 14 had warned of a “high level of audit and surveillance” of safety issues owing to the industrial disputation.

Mr Joyce replied to CASA on October 17 to stress the airline’s stance on the importance of safety.

The decision to lock out employees had fundamentally changed the risks facing the airline because it meant that the fleet would be grounded amid heightened safety concerns. The “genie is out of the bottle”, Mr Strambi said.

The second witness on Sunday, Qantas’s executive manager of commercial planning, Vanessa Hudson, said the industrial action had caused a collapse in the airline’s forward bookings.

This drop in bookings had been felt among high-value business passengers, and a suspension rather than termination of industrial action would leave uncertainty that would continue to affect confidence.

“Rebuilding confidence takes time,” she said.

Ms Hudson said 50 per cent of domestic bookings were made a fortnight before flying, which meant passengers were sensitive to any uncertainty. About 40 per cent of international bookings were in the three-month window before the date of travel.

She said Mr Joyce had informed her of the lockout at 4.50pm on Saturday but she had become aware that it was a “planning option”.

Assistant Treasurer Bill Shorten was listening intently from the front row of the hearing, underlining the importance of the proceedings.

But she said the government’s position was that the action should be terminated so that all sides went into an arbritration process. Ms Gillard would not speculate on the government’s options after the outcome of the hearings.

“I’m not saying Fair Work Australia is not up to the job,” Mr Abbott said.

“I think in the end the problem is with the Government – the Government has everything it needs in its existing workplace relations toolkit and it should use the powers it has got to resolve this dispute.”

Seeking to defend his strategy, Mr Joyce said the action could be a “positive turning point” for the airline and was needed in order to avoid drawn-out disruptions over the next year.

“The only option I had was not to have my customers in disarray all around the world for the next one year,” he said.

“There was no way to bring this to a close unless we brought it to a head.

“For our customers, I’ve apologised again today for the disruption that we’ve caused. But this will cause less disruption to our customers in the long run than a continuous strike by these unions over the next year, which was their plan.”

Mr Joyce made it clear on ABC TV on Sunday morning that the mood of shareholders at the company’s meeting on Friday helped influence the board decision on Saturday to ground the fleet.

“We were in negotiations with unions, we’d had over 200 meetings. We’d made a decision to get to the AGM and then talk, and then see [chairman] Leigh Clifford at the AGM talk about that being a watershed moment.

“We knew that if we got overwhelming support from the shareholders we were waiting to see what the union reaction would be.”

Unions had predicted the board would be rolled at the AGM but in fact shareholders gave management around 96 per cent support for its remuneration report and the re-election of directors, Mr Joyce said.

The union’s rhetoric suggested the dispute was going to get worse.

“So on Saturday we did call a board meeting, at the board meeting we discussed where we stood, I told the board my decision to ground the airline, it was fully endorsed by them.”

Mr Joyce rejected the idea that grounding the fleet took more than 24 hours and so his tactics must have been planned well in advance.

“We had to ground the A380s with essentially one hour’s notice. We had to ground the aircraft due to volcanic ash with no notice,” he said.

“The airline has the ability to act pretty fast because it practices it.”

The government was informed of Qantas’s plans around 2pm – just three hours before the airline went public with the news – a move Transport Minister Anthony Albanese described as a “breach of faith”.

“Qantas had not indicated that they wanted the government to intervene, nor had the unions ... either publicly or privately, so it is extraordinary that Qantas has taken this action,” Mr Albanese told reporters in Sydney on Saturday.

“But I think it is certainly a breach of faith with the government, the fact that there was no advanced notice of this action being taken by Qantas. I indicated that very clearly to Mr Joyce this afternoon.”

But Mr Joyce told Seven Network on Sunday morning that management had been in talks with the government continuously.

“They have known that we are bleeding. They knew that we were losing $15 million a week ... They knew that this position was not sustainable.”

Speaking on Saturday night ahead of the FWA hearing, she called for Qantas and the unions to get around the negotiating table and resolve the dispute.

“I believe it is warranted in the circumstances we now face with Qantas ... circumstances with this industrial dispute that could have implications for our national economy,” she told reporters in Perth.

“I believe Australians want to see this sorted out.’

Unions, from pilots to caterers, have taken strike action since September over pay and Qantas plans to cut its soaring costs as it looks at setting up two new airlines in Asia and culling long-haul flights.

It plans to cut 1000 jobs and order $9 billion of new Airbus aircraft as part of a makeover to salvage the loss-making international business.

“But Qantas management has given no notice before this wildcat grounding of their fleet,” Mr Howes said in a statement.

Mr Joyce said Qantas employees working overseas would continue to be paid during the lockout. However, he said employees in Australia who were involved in the dispute would not be paid starting from 8pm Monday.

Until that time, Mr Joyce said all Qantas employees should continue to turn up to work.

In the Saturday press conference, Mr Joyce said the three unions were making “impossible claims” and that the industrial dispute was costing the carrier $15 million a week. To date, the total cost of bitter industrial campaign is $68 million, the company announced on Friday.

He said that customers were “fleeing” from the airline amid ongoing uncertainty over how the action will affect flights and travel plans and he accused the unions of attempting to “bake Qantas slowly”.

“If the action continues ... we will have no choice but to close down Qantas part by part,” Mr Joyce said, adding that a shutdown of the carrier would have a “domino effect across Australian business”.

ENOUGH IS ENOUGH, SAYS TOURISM BODY

Tourism & Transport Forum chief executive John Lee said the tourism industry could not afford for this industrial campaign to continue.

“Enough is enough,” Mr Lee said in a statement on Saturday.

“This will have an immediate and potentially catastrophic impact on tourism operators and will threaten the viability of tourism businesses across the country.

“This issue must be resolved urgently and that will need leadership from the highest levels.”

Mr Lee said the industrial campaign had already affected tourism, reducing consumer confidence and making people less likely to travel.

“While some people have deferred their travel plans, others have decided its too difficult, and we are already seeing a drop off in forward bookings which will now only get worse,” Mr Lee said.

He said this year alone, Australia’s tourism industry has had to contend with natural disasters both at home and abroad, a strong Australian dollar enticing more Australians to travel overseas and reducing the buying power of international visitors, and weak economic conditions reducing demand from many of our key source markets.

“Now we are facing the uncertainty of this decision, forced by the unwillingness of unions to accept the globally competitive nature of tourism and aviation,” he said.

“The 500,000 people directly employed in Australia’s $94 billion tourism industry do not deserve to have their livelihoods threatened by this, which could be the straw that breaks the camels back.”

Tourism Industry Council NSW echoed the calls for the federal government to intervene, saying Qantas’s decision to ground its fleet was a crisis for tourism.

“Whilst we welcome Minister Albanese’s announcement to seek a suspension of all industrial action from members of the Transport Workers Union, Australian Licensed Aircraft Engineers Association and the Australian International Pilots Association, this action is effectively too little, too late,” the council’s CEO Andrew Jefferies said.

“Tourism will be massively affected by the grounding as around half of the domestic air fleet has been cancelled immediately.

“Our industry will be massively impacted with by this decision.

“The council calls for an urgent resolution and a reasonable compromise from the three unions involved.”

POLITICAL REACTION

Mr Abbott said the airline was an essential service and an important part of the economy.

“The government has been procrastinating for weeks about this and now it’s urgent that it be solved immediately,” Mr Abbott told reporters in Melbourne.

“It is the responsibility of government to ensure that essential services operate and that brand Australia is not damaged.”

Mr Abbott said it was a test of the government’s competence.

“We had enormous costs being imposed on the Australian economy by this industrial action,” he said. “We’ve had industrial action by the unions, we’ve now got industrial action by the company.

“The important thing is that the planes get back into the sky and the government needs to use the powers available to it to make that happen as soon as they can.”

The industrial umpire, rather that the federal government, should step in when a company’s management and unions cannot resolve an ongoing dispute, government frontbencher Nicola Roxon says.

Responding to criticism that the government could have intervened in the bitter dispute between Qantas and unions before the grounding, Ms Roxon urged both parties to behave like adults.

“I don’t think it’s right for Qantas to try to move responsibility for this dispute,” she told Sky News on Sunday, when asked why the government had relied on Fair Work Australia to resolve the dispute, rather than acted directly.

“There are two key players in this dispute. Qantas and their employees represented by their unions,” she said.

“We’ve always said that we think there should be a system where there are negotiated outcomes, and when those outcomes can’t be achieved, to use the industrial umpire.

“This lockout is also a sell-out of the spirit of Australia,” Senator Brown said in a statement on Saturday night.

“It is a multi-millionaires lockout of responsible decent pilots, crew and other staff whose work gives Australia the world’s best airline.”

He said the lockout was all about “exporting Qantas to a world of lower cost, lower services values and lower safety”.

“The government should stand up to Qantas selfish top brass,” Senator Brown said.

NSW Premier Barry O’Farrell, who along with Victorian Premier Ted Baillieu wrote to Ms Gillard during the week urging her to intervene in the dispute, said the federal government should have acted earlier.

“The dispute didn’t start last night, it’s been going on for months and despite its escalating impact upon the travelling public, the Gillard government has repeatedly refused to get involved to try and resolve it,” Mr O’Farrell told AAP on Sunday.

“Blind Freddy could have seen that this was going to result in a worsening situation, which was going to damage national and state economies.”

Liberal backbencher Jamie Briggs, who is campaigning within the Liberal party to embrace a new workplace policy, says it showed the failure of Labor’s Fair Work laws.

“Don’t forget that the ‘fair work’ laws are operating as intended,” he said on Twitter.

Meanwhile, Australian Greens advisor Tim Hollo used Twitter to say he had been taken off a Qantas flight and “told to leave”.

“We’ve all been told to go home,” he said on Saturday evening.

WHAT THE GROUNDING MEANS FOR TRAVELLERS

Qantas stopped all domestic and international flights from 5pm AEDT on Saturday, October 29 until further notice.

On Sunday evening, the airline said its fleet would remain grounded until at least midday on Monday, with a decision on afternoon flights to be made in the morning

Customers are advised not to travel to the airport unless they are travelling on a QantasLink, Jetstar or Jet Connect flight. They are urged to reconsider any non-urgent travel and defer their travel plans wherever possible.

A full refund will be available to any customer who cancels their flight because it has been directly affected by the grounding of the fleet.

Full rebooking flexibility will be available to customers who defer their travel.

Qantas codeshares with a number of airlines who are continuing their operations as scheduled. These flights have both Qantas and alternative carrier flight numbers eg. QF319 and BA16.

Only customers with travel plans in the 24 hours to Sunday evening should call Qantas on 13 13 13.

Domestic customers: If you are away from home and between flights on Sunday, Qantas will arrange accommodation, meals and transfers. If you are away from home and starting your journey on Sunday, Qantas advises you to source your own accommodation. It will reimburse you for reasonable out of pocket expenses including accommodation, transfers, meals and incidentals up to a total value of $350 per person per day. A limit of $250 per night for accommodation and $100 for incidentals (meals and phone calls) per person per day applies.

International customers: Qantas will arrange accommodation, meals and transfers but keep all receipts in order to make a claim.

Foreign Minister Kevin Rudd said Department of Foreign Affairs and Trade consular staff had arranged to work with Qantas, including attending airports around the world, to help Australians with re-booking and accommodation arrangements.

The Immigration Department urged anyone whose visa status could be affected by the grounding to contact the department.

LIVE UPDATES FROM QANTAS

Mr Joyce said the carrier would update travellers through its Twitter and Facebook pages.

Virgin spokeswoman Danielle Keighery said special counters had been set up for passengers stranded by the grounding of Qantas’s entire fleet.

“We are pulling together things as quickly as we can,” Ms Keighery told reporters at Sydney Airport on Saturday.

“We have dedicated counters, in all the airports around the country we have extra staff coming in at the moment.”

Ms Keighery said customers should also visit the Virgin website, which has been especially set up for Qantas passengers wanting to book a seat.

Air New Zealand spokesman Mark Street told NZ Newswire the airline was assessing whether it had the capacity to put on extra trans-Tasman flights to help its alliance partner, Virgin Australia.

Budget airline AirAsia X is also taking advantage of the Qantas industrial dispute by announcing “special rescue fares” to passengers affected by the airline’s decision to ground all its fleet.

“Anyone holding a valid Qantas ticket to any of our AirAsia X destinations for immediate travel in the next 48 hours can access our special rescue economy fares of $150 per sector outbound from our Australian ports,” AirAsia X commercial head Darren Wright said.

“For example it will be possible for these passengers to reach destinations including London and Paris for $300 one way from Australia. We are sympathetic to their plight and doing everything we can to assist with their travel plans.

“To take advantage of this special offer simply arrive at the AirAsia X counter at either Gold Coast, Melbourne or Perth airports with a valid Qantas ticket, and if a seat is available, passengers will be able to access this special fare.

Passengers can book other AirAsia fares online to reach their onward destination, the airline said.

Expedia, meanwhile, urged Qantas passengers who booked flights through the website to contact its call centre on 13 38 10 for immediate assistance.

JETSTAR UNAFFECTED

Jetstar, the Qantas budget airline, says its flights will not be affected by the grounding of the Qantas fleet.

“Jetstar has limited capacity on its flights this weekend,” it said in a statement.

“Opportunities to increase capacity to accommodate more passengers are currently being investigated.

“Safety remains Jetstar’s number one priority, all Jetstar staff are being advised to come to work as usual and will be paid as usual.”

Coach transport provider Greyhound Australia promised to help clear the backlog of stranded travellers, putting on extra services as needed.